June 20, 2018
Greening the gas in the grid
By: Melissa Stark

The case for natural gas has been based on it being “cleaner than coal and diesel”, or that it’s a “transition fuel” to a 100% renewable world. However, there already exists a gas that is 100% renewable, can be blended with natural gas and delivered via the existing infrastructure: biomethane or Renewable Natural Gas (RNG), as it’s called in the United States, produced from waste feedstock.

Produced from wet manure and organic waste (i.e., landfill and Municipal Solid Waste [MSW]), the greenhouse gas (GHG) savings can be over 200% and 90% respectively compared to diesel.1 In addition, injecting RNG into the gas grid also reduces the methane emissions from these sectors. Sixty-seven percent of methane emissions come from agriculture, MSW and wastewater: a significant portion of these emissions can be abated.

RNG is also a solution to greening the heat and heavy goods transport sectors where electrification has significant economic challenges. There’s also significant unused supply. In California, the state with the most biogas systems (276), the American Biogas Council estimates that the state has the potential to increase number of biogas systems more than 3x. In the UK, only 10% of potential feedstock is being utilised.2 Blending RNG and natural gas and leveraging the existing gas infrastructure repositions gas a critical to increasing the share of RNG and reducing methane emissions.

Advantages of greener gas products delivered via the gas grid are the ability to leverage existing gas infrastructure, lower CO2 alternative for heating and heavy goods transport, productive use of waste streams and abate methane from agriculture, MSW and waste water. Click here to expand.
Advantages of greener gas products delivered via the gas grid are the ability to leverage existing gas infrastructure, lower CO2 alternative for heating and heavy goods transport, productive use of waste streams and abate methane from agriculture, MSW and waste water.

Click to expand

Incentives and NEW regulation
Critical to the growth in RNG in the heating and transport sectors are supporting incentives and regulation, given the cost of RNG compared to natural gas. In the UK, the Renewable Heat Incentive provides financial incentives to increase the uptake of renewable heat by businesses, public sector and non-profit organisations. Fixed income (per kWh) for 20 years is provided to generators of renewable heat and producers of renewable biogas and biomethane, including a biomethane injection-to-grid tariff. The UK now has 401 anaerobic digestion plants, including 77 biomethane-to-grid plants. The UK Energy Networks Association estimates that biomethane will meet 10% of UK heat demand by 2020.

On the transport side, in the UK, the Renewables Transport Fuels Obligation (RTFO) mandates that a percentage of transportation fuels be renewable. With RTFO obligation levels rising, crop-cap limiting the use of non-waste feedstocks, and the opportunity to double-count biomethane (2x Renewable Transport Fuel Certificates), we expect an increase the use of biomethane in heavy goods transport.

The most game-changing regulation that will impact the production and use of RNG from waste sources is coming from California. Almost 60% of California’s methane emissions are from waste from landfills, dairy manure, non-dairy livestock and wastewater. That waste could be put to productive use. Regulation SB1383 includes the following targets:

  • Reduce dairy and livestock methane emissions by 40% from 2013 levels by 2030

  • Selection of at least five dairy biomethane pipeline injection projects by 1/1/2018

  • Divert 50% and 75% of organics from the MSW waste stream by 2020 and 2025 respectively (2014 baseline).

SB1383, coupled with the existing Renewables Fuels Standard (RFS) and the Low Carbon Fuels Standard (LCFS), along with an additional Interconnection Initiative, will see California make much more productive use of its waste while abating methane.

NEW customer demand and market development
In March 2018, L’Oreal announced an agreement to purchase approximately 40% of the RNG produced from the Big Run Landfill in Kentucky. L’Oréal USA’s 15-year purchase commitment of the RNG was a key underwriting component that led to the financing of the project. However, the RNG is up to 8x the cost of non-renewable natural gas. To offset the cost differential between RNG and non-renewable natural gas, L’Oréal USA will sell its environmental attributes into the transportation fuels market for approximately five years. This approach enables the L’Oreal USA to purchase enough RNG to achieve carbon neutrality for all 21 of its manufacturing and distribution facilities, spread across twelve states, with a single solution.3 This renewable gas Power Purchase Agreement (PPA) is ground-breaking as it signals that there could be an increasing demand for RNG from companies looking to increase their share of renewables.

The production of RNG from waste remains a complex value chain with high costs. The pipeline interconnection costs can be high and connection process bureaucratic. Developing RNG production and use also requires the cooperation of many regulatory bodies. But we do need a solution for methane emissions, and we do need a renewable option for heat and heavy goods transport.

Additionally, PPAs like the one from L’Oreal completely change the game; creating financing opportunities for RNG producers and a way to monetise the green credentials of RNG. To develop the RNG market, regulators may even decide to implement a Renewable Gas Standard, in the same way that there are Renewable Portfolio Standards and Renewable Fuels Standards.

Now, that would be a game changer.

Melissa Stark will be talking about this topic during the 2018 World Gas Conference in Washington D.C. on Wed 27 June.


1 Council of the European Union, 13/12/2017,; Accenture research paper for WGC, “Reinventing the Product and the Product Positioning of Natural Gas.”
2 “Biogas Map,” The Official Information Portal on Anaerobic Digestion, 2018,
3 “L’Oréal Renewable Natural Gas Project Poised to Set New Industry Standard”, Sustainable Brands, March 2018, Factiva; “L'Oréal USA Announces Innovative Approach to Achieve Carbon Neutrality for its Operations Facilities by 2019”, L'Oréal USA Press Release, March 2018,

Popular Tags

    More blogs on this topic